Gulfsands Petroleum Regulatory News (GPX)

27 Jul 2007 07:01

Gulfsands Petroleum PLC27 July 2007 1,085 bopd of 26 degree (API) oil flows on DST of Cretaceous aged reservoir KHE-2 appraisal well extends oil column London, 27th July, 2007: Gulfsands Petroleum plc ("Gulfsands", the "Group" orthe "Company" - AIM: GPX), the oil and gas production, exploration anddevelopment company with activities in the U.S.A., Syria and Iraq is pleased toannounce that the Company has successfully drilled and tested the firstappraisal well on the Group's Khurbet East discovery, being the Khurbet East - 2("KHE-2") well. An open-hole drill-stem test produced oil to surface at ratesup to 1,085 barrels of oil per day ("bopd"). The Massive Formation The Massive Formation was encountered in the KHE-2 appraisal well at a depth of1,931 metres. The Company then successfully recovered approximately 10 metresof whole core from a 20 metre coring interval. Recovery of the entire coredsection was limited due to the presence of fractures in the reservoir. Prior todrilling ahead, the Company commenced an open-hole drill-stem test ofapproximately the top 10 metres of the reservoir, which resulted in oil flow tosurface at a maximum rate of approximately 1,085 bopd during nitrogen lift ofthe well. During the test period following the nitrogen lift the averageproduction rate was 710 bopd increasing to a final rate of 820 bopd. Theresults of the testing operation indicate excellent formation permeability andindicate that this production rate would be materially enhanced with artificiallift methods (gas lift or pump). All wells in the Massive Formation in theBlock 26 area go onto artificial lift relatively soon after they go onto initialproduction. Preliminary assessment of the oil gravity is 26 degrees API, whichmakes this oil virtually identical to the oil produced in the Souedieh Field,located some 12 kilometres to the northeast. Oil samples from the test havebeen submitted for laboratory analysis, but this preliminary assessment isconsistent with the oil recovered from Massive Formation in the KHE-1 well. After the successful drill-stem test, the Company drilled the KHE-2 to a totaldepth of 2,050 metres and completed a wireline logging programme. Independentwireline log analysis of the Massive reservoir indicates a gross oil column ofsome 49 metres with approximately 29 metres of net oil pay, compared with thelower figures of 31 metres and 22.5 metres respectively seen in the KHE-1 well. The strong flow-rate from KHE-2 plus the geologic and reservoir informationgained from both the KHE-1 and KHE-2 wells indicate that the Khurbet Eastdiscovery should be highly economic in the context of low development costs,proximity to production infrastructure and a favourable Production SharingContract in Block 26. The Chilou Formation The Tertiary aged Chilou B Formation was also encountered in the KHE-2 well.This section appears similar to that encountered in the KHE-1 well; however,preliminary analysis suggests the presence of water and residual or immoveableoil, or a relatively low permeability reservoir. Consistent with other wellsdrilled in the area, the Chilou B is considered to have minor resource potentialcompared to both the Cretaceous and Triassic reservoirs at Khurbet East. Forward Programme Following the successful results from the KHE-1 and KHE-2 wells, the Companyplans to acquire a 3D seismic survey over Khurbet East commencing in September.This data will be used to optimize future drilling locations at Khurbet East,facilitating a strategy to move towards early development and production. Inparallel with this acquisition programme, the Company will commence appraisal ofthe Kurrachine Dolomite, and draft the further field appraisal programme and theinitial Development Plan for discussion with its industry and governmentpartners for implementation at the earliest possible point in time. Finally,the Company will continue further exploration on the Block following up on theKhurbet East discovery. Gulfsands' CEO, John Dorrier, said: "The test of oil from the Massive formation confirms the excellent flowpotential of this reservoir and the lateral continuity of the reservoir betweenthe KHE-1 and KHE-2 wells. Greater net oil pay in KHE-2 than KHE-1 indicates adeeper oil-water contact than previously expected, thereby increasing thereserves potential in this reservoir. The Company now plans to move rapidly tocommercialize this discovery in cooperation with its partners." NB: This release has been approved by Jason Oden, Gulfsands Exploration Manager,who has a Bachelor of Science degree in Geophysics with 22 years of experiencein petroleum exploration and management and is registered as a ProfessionalGeophysicist. Mr. Oden has consented to the inclusion of the material in theform and context in which it appears. ABOUT GULFSANDS: Gulf of Mexico, USA The Company owns interests in 54 offshore blocks comprising approximately193,000 gross acres which includes numerous producing oil and gas fieldsoffshore Texas and Louisiana with proved and probable recoverable reserves netto Gulfsands at 31 December 2006 of 41.5 BCFGE (6.9 MMBOE), consisting of 27.3BCFG and 2.36 MMBO. Onshore USA Gulfsands owns interests in two oil and gas fields onshore Texas, USA (98.5%working interest in Emily Hawes Field and 37.5% working interest in Barb MagField) with proved and probable recoverable reserves net to Gulfsands at 31December 2006 of 3.1 BCFGE (0.5 MMBOE), consisting of 2.8 BCFG and 57,000barrels of oil. Syria Gulfsands owns a 50% working interest and is operator of Block 26 in North EastSyria. Block 26 covers 11,000 square kilometers and encompasses existing fieldswhich currently produce over 100,000 barrels of oil per day. These fields areoperated by third parties including the Syria Petroleum Company. Iraq Gulfsands signed a Memorandum of Understanding in January 2005 with the Ministryof Oil in Iraq for the Maysan Gas Project in Southern Iraq and followingcompletion of a feasibility study on the project is negotiating details ofdefinitive contracts for this regionally important development. The project willgather process and transmit natural gas that is currently a waste by-product ofoil production and as a result of the present practice of gas flaring,contributes to significant environmental damage in the region. Certain statements included herein constitute "forward-looking statements"within the meaning of applicable securities legislation. These forward-lookingstatements are based on certain assumptions made by Gulfsands and as such arenot a guarantee of future performance. Actual results could differ materiallyfrom those expressed or implied in such forward-looking statements due tofactors such as general economic and market conditions, increased costs ofproduction or a decline in oil and gas prices. Gulfsands is under no obligationto update or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise, except as required by applicable laws. For further information including the Company's recent investor presentation,please refer to the Company's website www.gulfsands.net or contact: Gulfsands Petroleum (Houston) + 1-713-626-9564John Dorrier, Chief Executive OfficerDavid DeCort, Chief Financial Officer Gulfsands Petroleum (London) 020-7182-4016Kenneth Judge, Director of Corporate Development 07733-001-002 College Hill (London) 020-7457-2020Nick ElwesPaddy Blewer Teather & Greenwood (London) 020-7426-9000Tom Hulme (Corporate Finance)Tanya Clarke (Specialist Sales) This information is provided by RNS The company news service from the London Stock Exchange